Ranbaxy exit can trigger consolidation of Indian firms

Ahmedabad, June 13 (IANS) The Rs.197.8 billion ($4.6 billion) acquisition of Ranbaxy Laboratories by Japanese pharmaceutical major Daiichi Sankyo could “catalyse” a process of consolidation among Indian drug companies, Indian Pharmaceutical Alliance (IPA) secretary-general D.G. Shah said here. “This will be a positive impact,” Shah told IANS Friday.

The generic market is strong and all indications point to a robust growth, he said, adding that companies such as Glenmark, Sun Pharma and Zydus Cadila, which have clear strategies and focused approach, would not be affected.

Shah, however, said there would also be a negative impact as Indian companies would be chased by investment bankers with buyout proposals. This could act as a stress factor on the companies.

But Daara Patel, secretary-general of the Indian Drug Manufacturers Association (IDMA), took a dim view of the acquisition.

“The development is not very good for the Indian drug industry. The acquisition was sudden and there is no clear indication what prompted the move,” he said.

But since acquisition has taken place, “it will be for Indian companies to ponder whether Ranbaxy’s exit was due to government policies or it had something to do with business environment,” the IDMA official said.

Zydus Cadila chairman and managing director Pankaj Patel said he did not see any takeover threat to his company. “Rather it is Zydus Cadila which is in acquisition mode,” he told IANS.

“As a promoter with 75 percent shareholding, there can never be a threat to Zydus. We will continue to grow on our own steam.”

With revenue of Rs.16.13 billion in 2007, Zydus Cadila is India’s eighth largest pharma firm.